I might be boring the pants off you with my European Central Bank Posts – but what’s happening in Europe is going very fast and it’s important. Power (lots of it) is shifting towards Frankfurt and Brussels. How will this power be used?
First, the shift. A quote from a recent speech from José Manuel González-Páramo, member of the board of the European Central Bank:
In other words, the euro area is responding to the crisis by creating a new and more comprehensive model of economic governance. This is aimed at preventing imbalances in all policy areas before they can trigger crises – and managing crises more effectively when they do arise. In many ways, this response is sui generis and departs from the template we associate with political federations. For example, the “two pack” gives the Commission the power to demand the kind of reforms that the U.S. federal government could not demand of a U.S. state. Moreover, the federal government would not be able to sanction a state if, for example, its tax code was leading to a local housing bubble. This is now not excluded in the euro area under the Macroeconomic Imbalances Procedure.
The reason for this is political economy … //
… And if things still go wrong, we always will have the European heads of state to save us (read the thing)!
But how will this power be used? Well, at the moment, while the present crisis is not yet solved, the official position still seems to be that for instance in a country like Spain 23% unemployment can be solved by, at the same time, contracting the economy and reforming the labor market (read: more power for mediocre managers). Now, I can understand that being able to fire somebody at will is a token of manhood in the USA – but this kind of flexibility did not lead to high job growth in the USA, post 1998. To solve Spanish unemployment we will have to think of something slighty smarter, like investing in a modern economy and real flexibility of labor, i.e people who for instance have the right to part-time work. (full text).
Lord’s Resistance Army LRA on en.wikipedia;
Yet Another Reason to Hate the Mortgage Settlement: The Release is Botched, on naked capitalism, by Yves Smith, March 18, 2012;
The Rothschild Organigram, created June 16, 2010, published on box;